The Future of AI in the Microsoft Empire
Microsoft is embedding AI into every software product they produce, from the Windows operating system to individual software products like Copilot 365 (Office), and yes even Notepad, Paint, Photos, and Terminal.
We seem to be in a World-wide AI bubble much like the dot-com bubble of the 1990's. Investors are pouring money into every AI start-up they can find with the expectation of massive financial gain. While it's true that AI is important and here to stay, is there really a way to monetize its exorbitant cost?
There is a tremendous cost to AI including real estate, servers, electricity, and yes, people, yet there are no software companies generating significant revenue from AI. There are a few models for revenue that involve users paying monthly for pro-versions, but hardly any significant offset to the overhead costs.
A few AI companies will undoubtedly survive the bubble. Will Microsoft, OpenAI, Google, Amazon, and Grok be the winners, and will all the others fall by the wayside? The question then becomes how will they be able to support the high cost of AI and remain viable companies?
The AI bubble reminds me of the Texas Emu ranching boom in the '90s. The idea was that Emu meat could become a viable and profitable product. The Emu eggs were being sold at exorbitant prices to prospective ranchers. Some eggs sold for as much as $3,000.00 apiece. The only people who made any real money in this short-lived bubble were the ones selling the eggs. The only companies making money in the AI bubble are the construction industry who are building the server farms, the companies selling the hardware (Nvidia), and the electric companies.
Microsoft's early investment in AI brings to mind their venture into the mobile phone market. They got a late start and couldn’t compete with Apple and Motorola. Microsoft isn't going to let that happen again and are jumping into the AI market with both feet.
Microsoft is hurriedly incorporating AI into all its products to push the technology. What happens when they can't turn a profit from this investment. Will the users be left with features that no longer work unless they pay an exorbitant monthly fee, or will Microsoft offer a "classic" version of all their software as they have with Microsoft 365?
It will be interesting to see how this all unfolds in the next few years.
